Tate & Lyle has reported an increase in profits for the first half of the year, defying a notable drop in sales across its food and beverage solutions sector.
In the six-month period ended 30 September 2024, Tate & Lyle’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose by 6% to £188 million. The profits for its food and beverage solutions segment saw a modest increase of 3%, reaching £157 million. However, overall group sales fell by 7%, amounting to £775 million, while sales in the food and beverage solutions division declined by 8% to £631 million.
A considerable part of the impact was mitigated by the successful performance of the Sucralose segment, which experienced a 17% rise in sales, reaching £99 million. In Europe, sales dropped significantly by 23% to £130 million. This decline was attributed to adjustments in pricing due to notable reductions in input costs and strategic price investments. The sales volume in Europe maintained its pace with the previous year, buoyed by stronger demand in categories like beverages, soups, sauces, and dressings, although this was somewhat offset by weaker demand in infant nutrition products.
Despite these challenges, Tate & Lyle remains committed to innovation, which contributed 17% to the sales of its food and beverage solutions division. There is an expectation for volume growth to accelerate as input costs stabilize. The company anticipates that the effect of input cost deflation will diminish in the latter half of the year.
The company’s full-year forecast remains firm, with expectations to see slightly lower sales compared to the previous year, alongside a profit growth ranging from 4% to 7%. Chief Executive Nick Hampton remarked, “It has been a momentous six months for Tate & Lyle. The business has continued to perform well delivering a return to volume growth, continued strong profit growth and excellent cash generation.”
Hampton highlighted the company’s recent strategic move with its agreement to acquire CP Kelco, a US ingredients company, for £1.4 billion. This acquisition is expected to bolster Tate & Lyle’s competitive edge by broadening its innovation and solutions capabilities. According to Hampton, “Since the announcement of our combination with CP Kelco in June, we have seen a very positive response from our customers who recognise the much broader innovation and solutions capabilities we will offer.”
Tate & Lyle’s financial performance in the first half of the year underscores its adaptability in a tough economic environment. By focusing on innovation and strategic acquisitions, the company is well-positioned to navigate future challenges and opportunities.
